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October 2016

White House offers toolkit to ease barriers to housing development

Says inaction is costly to households, local economies and environment

Emphasizing a "stable, functioning housing market is vital to the nation's economic strength and resilience," the White House issued a 10-point "Housing Development Toolkit." The document outlines both the consequences and benefits of restrictions that affect production.

"A stable, functioning housing market is vital to our nation's economic strength and resilience," the report states. Moreover, it says the availability of quality, affordable housing "is foundational for every family."

"This report is very timely, considering the work we are engaged in with the City of Seattle and other municipalities in King County to correct the housing supply shortage we have experienced over the past three years,"  said Patti Hill, president of the Seattle King County REALTORS┬«.  "Creating an environment that allows more available and affordable housing for consumers is our number one priority."

The 23-page White House report urges states and local jurisdictions to modernize their approaches to housing development regulations so they can better respond to growing demand. Doing so could still allow these localities to restrain unchecked housing cost growth while protecting homeowners, and strengthening their economies.  

"Not all barriers to housing development have negative impacts," the report acknowledges, but adds, "The accumulation of even well-intentioned land-use policies can restrict housing availability," and have other negative consequences.

Local land use policies and regulations "can increase the supply of well-located affordable housing, address externalities such as environmental impacts associated with development, create better connections between housing options accessible to transit, and support the fiscal health of states and localities," according to the report's authors.

On the downside, restrictive policies can create uncertainty for developers, limit private investment, exacerbate the imbalance between jobs and housing, and induce urban sprawl. The report contends locally-constructed barriers to new housing development include land use restrictions that make developable land much more costly than it is inherently, zoning restrictions, off-street parking requirements, arbitrary or antiquated preservation regulations, residential conversion restrictions, and unnecessarily slow permitting processes.

To alleviate critical needs, the toolkit offers various reforms implemented around the country that could allow supply to respond elastically to demand. "Refreshed" regulations could help localities promote healthy, responsive, high-opportunity housing markets, "despite the common and sometimes challenging political barriers to reform and improvement."

Among actions the toolkit identifies as starting points to modernize housing planning and development are:

  • Establishing by-right development
  • Taxing vacant land or donating it to nonprofit developers
  • Streamlining or shortening permitting processes and timelines
  • Eliminating off-street parking requirements
  • Allowing accessory dwelling units
  • Establishing density bonuses
  • Enacting high-density and multifamily zoning
  • Employing inclusionary zoning
  • Establishing development tax or value capture incentives
  • Using property tax abatements

In spotlighting various initiatives, the report stresses the list is not exhaustive, but instead offers examples of initiatives some communities have undertaken to expand options and opportunities for hardworking families.

The white paper also touts improvements in the nation's housing market during President Obama's tenure, but also urges actions for undersupplied markets and rent-burdened families.

Since first quarter 2009, when national home prices plummeted roughly 20 percent from mid-2005 and left nearly 13 million households underwater, a recovery has helped households regain $6.3 trillion of lost equity. More than half the underwater owners have climbed out of negative equity since 2011.

The report notes the recovery has been measured by rising home and property values, but this returning health, coupled with vibrant job growth, have not led to a resurgence in housing construction or in expanded housing options for working families. The White House points to onerous state and local rules as inhibitors to housing production.

Since its release in late September, the report has drawn mixed reviews.

Jason Furman, chairman of the Council of Economic Advisers stated, "When unnecessary barriers restrict the supply of housing and costs increase, then workers, particularly lower-income workers who would benefit the most, are less able to move to high-productivity cities. All told, this means slower economic growth."

A guest opinion writer in New York Slant, a website focused on NY City and state politics and government, believes the toolkit "falls woefully short" because it completely ignores a rapidly growing threat to affordable housing in that city and across America: short-term rental of residences on platforms like Airbnb."

That writer, City Council member Helen Rosenthal from the 6th District in Manhattan, vowed to enlist her peers in the active pursuit of "policies, rules and regulations to combat our city's housing crisis," adding, "and this includes dealing with the meteoric rise of Airbnb and the devastating effect it has had on our housing market."

Henry Grabar, a staff writer for Slate's Moneybox, also criticized the report for omissions. "The problem with this report, unfortunately, is that it does little to confront the large, diverse, and effective coalition that is arrayed against these changes. He faults several culprits, ranging from wealthy suburbanites who don't want rental housing in their neighborhoods to environmental groups, municipal politicians and car-dependent commuters.